The Unseen Catastrophe

 Congress has been printing money at a spendthrift rate.  Interest rates were low, and now they are rising.

The national debt is at 31 trillion.  The big thing for Congress is, what is the interest payment for the next fiscal year?  What are the implications.

As the interest rates rise, so does the interest on the national debt. The thing to remember is, most people in Congress have not had any education relating to economics. The other thing to remember is that most voters have no idea of what economics is all about. We have a lot of people that think everything is normal and today will be like yesterday. So, what this boils down to is the fact that we could have a meltdown.  

It is kind of like Southwest Airlines.  Everything worked until it didn't.  

If /When the interest rates hit 8% the government cannot pay the interest.  What happens at that point? Your 401K is dust.  They have borrowed everything you have saved and spent it.

Can you spell Zimbabwe? 

Remember eggs don't cost more, your currency buys less.

The idea that costs are rising is absurd.  It just takes more dollars for the purchase.  The government has pissed in the whisky. They have printed what they could not tax out of us.

At some point, when they can't pay the interest on the national debt, the real problem begins. Insolvency.

Precious metals could save your retirement.

I've seen cigarettes go from 25 cents a pack to $10--tell me I am wrong.

The claim "Democrats vote early"

Every wonder why when it comes election time, you hear the phrase “Democrats vote early?”  It’s treated as a known fact.  There is no way statistically, that that statement can be substantiated. Most would agree that it would probably be about a 50-50 split.

Let’s look at the term “early voting.”   This has to involve a paper absentee ballot.  Early votes are those cast before election day. The regular votes are tallied and then the paper ballots are counted. 

If one accepts the premise that Democrats vote early, it is no surprise to see Democrats rise past their Republican counterparts when the absentee ballots are counted.  The conclusion “Democrats vote early” is valid.

What you could be looking at is election fraud.  Why would more people vote Democrat than Republican in just the absentee ballots? Nobody raises that question, after all everyone knows Democrats vote early.

Any good statistician could, after looking at the polling numbers of the live voters, could project out the totals for the mail in ballots.  From there, the election commission or whatever it is called can create the necessary winning ballots.  Many ballots mailed out, are not returned and some of the voters are dead or moved.  So, in an election where say there is about one million voters, there is about 5% to 20% not returned. Skimming one or two percent of the vote, could determine the winner.  No one will know. Democrats always vote early. 

Also with absentee ballots, you can sell your vote for cash.  $200 dollars for groceries for your kid or vote, make the decision.  Millions of dollars are spent on these elections, and it is not all going to advertising. $200 a vote buys 5,000 votes with just one million.

We need to get rid the idea that “Democrats vote early” and end absentee ballots.

Do things really cost more?

The mentality of the population in the USA thinks that prices are rising.  Things cost more. It is kind of laughable. The actual fact is, the dollar is worth less than it was yesterday.

 Things are not more expensive; the dollar has lost value.  $20 used to fill a gas tank in the 1960’s.  Now in 2022 20 gallons of gas costs $120. 

 The fact to realize, is that things don’t cost more, your dollar buys less.  Politicians’ blame this price rise on the gas refiners and the stores.  How dare you gouge the consumer!                    

What we are really looking at is an erosion of value of the dollar---it doesn’t buy as much as it used to.

 The concept to look at is: a rise in prices doesn’t mean the item is more expensive. The dollar doesn’t have the purchasing power it once had.

The Hidden Truth of the 2020 US Election.

The US is splitting apart.  On one side we have the Republicans, and on the other side we have the Democrats, News Media and Internet.  Normally the Republicans and Democrats balance each other out and the independents decide the elections.  Now we have CNN, MSN, The New York Times, The Washington Post, Facebook and Twitter solidly on the side of Democrats.  These internet conglomerates censor the news by blocking users from distributing content that they deem misinformation or by omission, failing to report the news.  Basically, this is censorship.  The news medias, through their biases, are influencing the thoughts of the country.  The funny thing is, these people probably only represent about 5 percent of the population. 

Most voters begin to think about elections a week before the event.  A majority of American voters don't follow politics, have no memory of the performance of their candidate over the last 4 years.  The news media and social media will guide them in choosing a candidate. 

Our last election had flagrant voter and media fraud.  The Democrats, the news media and the internet giants like Facebook and Twitter censored all of it.  They were against Trump. They censored the Biden laptop that exposed the corruption and graft in the Biden family before the election. It is now slowly coming to light.  People don’t fully appreciate how powerful censorship by omission is.  This helped swing the election to Biden.  You can see the newspaper bias when you read “Trump falsely claims that he won the election.” The word “falsely” doesn’t belong in the sentence.  That is for the reader to decide. Including the word, makes the sentence an opinion.

 A lot has been discussed about the convenience of mail in voting.  If you lived in a country like China or Russia, would you want mail in voting?  Fill the ballot out wrong and you might end up in a gulag rehab camp.  

 Democrats and Republicans vote the party line most of the time.  With mail in votes, you also have included people who would not make an effort to vote in person.  These are the votes to focus on.  10 million dollars will buy a lot of advertising and it is always questionable how effective it is.  Take the same 10 million and send out couriers to purchase those blank ballots. Figure they would pay up to $200 per ballot. Imagine a courier is given 2,000 dollars and told to show up with 10 ballots filled out with their parties’ candidates selected, that’s not hard to do. You knock on the voter’s door and offer to help them fill out the ballot, give the voter $100 and drop it off for free. Such a deal.  If you are poor, $100 is something tangible that can be spent.  It is only one vote, no big deal, take the money.  If you are the courier, any part of the $200 not given to the voter for their ballot, is the couriers, free and clear. 10 million dollars could buy 50,000 votes.  Zuckerberg spent 420 million on the 2020 election. 

 The Democrats want voters to be able to vote without having a voter ID.  They also want them to vote absentee without any identification. In California, if you get mailed a ballot, you can vote.  That mail in ballot is worth money, you can sell it. By forcing the voter to vote in person, the ability to buy votes disappears.  If you have a city of 100,000 voters, figure 60 percent will vote. With mail in voting, many of the ballots of people who have moved or have died get returned to the election board. Those returned absentee ballots are blank checks.  Who’s to say how many were returned to the election board? No one will know if those “votes” somehow get submitted and counted, especially if there is no voter id or signature required.  This is what the Democrats want to do in every state, unrestricted no ID voting.

The Democrats in the past have been the party of repression.  After the civil war, The Democrats took over the south. They passed laws to keep blacks from voting, referred to as “Jim Crow" laws.  They also formed the Klu Klux Klan that went around terrorizing and killing blacks. They were for segregation in schools. Times have changed, the Democrats used to represent the working man, now they represent big money and labor unions.

The thing not fully comprehended by outsiders, is the fact that many election districts have ways of keeping the local people in power.  A city that is run by Democrats for 50 years is kind of an indication that something is not right. It doesn’t matter how you vote; the same party gets reelected.  In that case, people stop voting, they consider it a waste of time. Think about it, if a city doesn't update the voter rolls, a lot of ballots get returned by the Post Office.  Who is to say that post office returned 100 or 10,000 ballots? Wink Wink, most voter fraud is at local levels.

The super-rich people in this country are now aligning with the Democratic party.  They are trying to fragment the rest of the population, by tearing down our historical statues and rewrite our history with critical race theory.  I don’t think we are ready for this. This isn’t what Democracy is all about.  Live and be free, not live and fear the "woke" people. 

Something is not right. And the further we go in time; more things seem to be falling apart. Biden is destroying the fabric of our democracy and everything else to boot. Obama’s quote about Joe Biden, “Don’t underestimate Joe's ability to F things up,” rings true.

 

To be continued

The Ukrainian Dilemma

The Ukraine is a peaceful country and yet it has been attacked by Russia that has nuclear weapons.

It's definitely not a defensive move by Russia.  If the world lets this go without stopping this horrible rape of an innocent country, the other adjacent countries are next. It has nothing to do with Nato.  It has to do with human decency.  We must stand up to atrocities not turn a blind eye to them.

Let's take a stand, support the Ukraine and strike anyone who wishes them harm.  How can Russia say we risk world war? Putin is the one risking world war. He is threatening  that because he is vulnerable.  We can attack his forces in Ukraine with impunity; they shouldn't be there.

Poland, give them the planes now, the USA has no balls under Biden.  Europe is next, if Putin is successful.  Putin needs to be stopped in the Ukraine.  A country will only go nuclear when the homeland is threatened. Putin is bluffing with a bad poker hand.

The Money In the Bank

When one thinks of all of the money in banks all over the world, it has to be the savings of individuals.   A lot of it is retirement savings. There are a lot of people borrowing these dollars, governments, investors, stockbrokers, etc. Banks, brokerages and investment firms are the conduit for these transactions.  The whole thing almost collapsed in 2008.  Congress came to the rescue and saved the banks.  Ever wonder why?  The United States government is the biggest borrower from the banks.  If they go under, the whole system collapses.  The government would be insolvent.

Back in the 1960’s, Congress was spending so much that the Social Security Trust Fund wasn’t generating enough cash for them to borrow from.  Well, they figured a way to get access to more money by passing the IRA and 401k plan.  It sounded like a retirement savings plan.  It kind of was.  The neat thing about it is that you could not withdraw the funds until you were 65 and then you paid taxes on it.  So, if something went seriously wrong, the saver could not cash out without a severe tax penalty. This meant that there would be no panic selling on Wall Street.   This restriction allowed the government to borrow hard dollars earned today and give back inflated dollars when people retired.  This was a lag time of about 40 years.

The thing I look back to in history is the Weimar Republic of Germany in the 1920’s.  People saved for retirement and then their monetary system collapsed.  The old were hit the hardest. These were the people with savings in the bank.  These were the people who were trashed.  They lost everything.  The real thing not realized is that when you get old, you become invisible. Governments know that old people are expendable when it comes to their savings, in 10 years, they are dead and soon forgotten.  These people saved and played by the rules and then in retirement, they get shafted.  No one will get voted out of office or go to jail for this crime. Nobody right now, comprehends how bad Congress has screwed up government financing. It has been going on for years.  We are talking at least 60 years.  This isn’t a Democrat or Republican thing; it involves all of Congress.

What you have to look at is this.  All of your savings could end up as a big zero.  Just like Zimbabwe, 4 billion dollars for a cup of coffee.  The 401K has no investment advantage in today’s world. It offers a negative return on investment over a span of 40 years.

Precious metals on the other hand, were not that great when interest rates were high.  Why buy metals when you other investment could return 10-20% interest?  Parking savings into precious metals has no downside at this time.   There is no interest lost from taking possession of precious metals, in today’s world. Inflation over time, is very cruel to people saving for retirement.  Bear in mind that a person’s age defines their present perception of inflation.  To a person entering retirement, inflation has stolen their savings. When they started saving, 50 years ago, interest rates were around 5 to 9%. A million-dollar nest egg would have provided $50,000 to $90,000 in interest every year. Not in today’s world, the interest is about $10,000 per year.  This is not what was envisioned when they started their IRA.  If you’re 25 years old, an IRA appears to be a fool’s dream.  There is no reward for saving money, compound interest is no longer the “8^th Wonder of the World.”

Monetary survival of your assets is your goal.  With interest rates so low, precious metals have command of the playing field.  Governments over time cannot control the value of their currency.  Real estate is often used as a good store of value that survive the curse of inflation.  The trouble is, their high visibility to be taxed, not to mention rent control.  It still has had a very good return over a timeline of 20 years.  Gold, silver and platinum are my favorites.  If you hold all three, you can play the metals market. You can trade from one market to the other.  The nice thing about precious metals is that they are not visible to the banks or to government.  That can be to your benefit if you end up in a rest home.  I have my son and wife on our bank safety deposit boxes, only two keys. So, there is no probate problem in this case.

The reality of what we are looking at in the current financial markets is rather unusual.  Probably the right word would be absurd. No one is going to save money in a bank paying 0.05 % interest.  Are investors accepting a contradiction of economic principles?  I think not.  But the problem is this, the investor doesn’t know what to expect from this sort of convoluted banking, involving our government debt. This hot mess cannot be financed by zero interest rates without savings coming from somewhere.  We could be facing the biggest banking collapse in history. 

The only plausible source of funds that I can come up with is the 401K retirement plans along with other pension plans.  The real question to ask, is who is holding on to all of these real estate loans at 2% when the interest rate jumps to say 4%? The rule of 72 states, divide the interest rate into 72 to get the time it takes to double your money.  72 divided by 2% interest, is 36 years. That’s a few years short of retirement. 72 divided by 4% interest, is 18 years, means your savings could quadruple by the time you hit retirement age. What is not sold to anyone at the present time is that at 1% interest, you wait 72 years for your funds to double.  Nobody will accept those terms if it is pointed out to them.  If everyone was to spend their paycheck now for immediate gratification; the banking system goes poof.

The economic rules are in place, and the system violates every one of them.  I'm debating now, do I buy gold or platinum?  I'm not trying to make money; I am trying to keep what I have already earned.

Merry Christmas everyone and have a Happy New Year

Jim in San Marcos

The New Green Idiocy

The politicians in power want to get rid of gas burning cars and replace them with electric cars. Less emissions and they tout less of a carbon footprint. This doesn’t really ring true.  We have about 287 million vehicles on the road.  What happens when we go electric?  The power plants will need to triple electricity production (this is a guess on my part).  Presently we have about 540,00 electric cars on the road.

 The biggest sales incentive for electric cars, is that they are environment friendly.  They claim that you can charge a vehicle for about $13 dollars for a fill up and at a cost of 4 cents a mile. If the US went to electric cars, imagine the tax loss to the government on gasoline; 18 cents per gallon federal excise tax, 67 cents California tax, and 9% sales tax on the price, comes out to about $1.20 a gallon.

 The environmentalists talk about green earth and they miss the point.  The amount of electricity needed to supply trucks to transport goods for delivery is not even feasible using present power plant output.  The funny thing is that it involves burning more coal and natural gas to produce the power needed.

 If you look at the diagram below, coal and natural gas are 2/3's of our energy production. The people in charge want to go to wind and solar as a transition to a green earth plan.  It is a little too far-fetched to believe. The current government wind energy program allows doctors or other high earners to get a half million-dollar tax credit for investing in a wind turbine.

 

Diagram courtesy of Wikimedia Commons

Right now, if the Chinese wanted to attack us, they could shut down our entire communications network with one Electromagnetic Pulse Bomb. It would fry cell phones and destroy the electrical grid.  A solar flare could do the same.  Imagine the extra kick that would have, if all of our cars were electric. It reminds me of Texas, last winter, with all of the wind turbines shutting down from the snow and ice.

 The car industry as a whole, cannot produce an electric car that is profitable.  Elon Musk is not making millions on producing electric cars, but making millions on selling the government tax credits to other car companies.

Quoting Adam Schrader for the Dailymail.com Jan 31, 2021

The electric car maker recorded a net income of $721million in 2020, from a gross profit of $5.4billion.

But the company's revenues show Tesla would have noted a net loss for 2020 if it had not relied on its lucrative $1.6billion in sales of regulatory zero emission credits to other carmakers.

Regulatory credits are given by the state and federal government for contributing zero pollution to the environment. Carmakers must hold a certain number of credits or face hefty fines or have their business licenses revoked.

Tesla can bank and sell to other carmakers that need help complying with emissions regulations to avoid the heavy fines. 

 Tesla is selling for over $1,000 a share. Kind of reminds me of the South Sea bubble. 

 Energy independence makes gasoline and diesel vehicles a fail-safe form of reliable transportation in times of instability.  Just waiting in line at Costco to get gas, makes you marvel at hundreds of cars filling up each hour.  Imagine waiting 3 hours to charge your car at home (no line).  Imagine what you could be charged at a charging station for electricity. Sixty dollars an hour might be a reasonable price; waiting in line wouldn’t be a viable option.

The real concept that needs to be advanced, is using hydrogen to power our vehicles. The trouble is, there is no cash incentive to bring it to fruition. There are billions at stake building electric cars that are unprofitable to produce and at the same time very limited in their range of travel. There is a gold rush among car producers right now, for electric car emission credits from the federal government.  

Running out of electricity is not like running out of gas, but you do have to wonder why electric cars are considered better by the government.  I've always said that whatever the government wants you to do, be against it; they don't have your best interest at heart.  What do I know?

California Living The Good Life

All of our interaction with the government seems very normal.  A bill for property taxes, a bill for car registration, car insurance, and other items are all the norm. If you own a car, and want to keep it legal, you need to pay for plates and insurance.  Go to a store and pay for your merchandise and walk out.

 In California it is different.  If you are homeless, there are no property taxes (kind of obvious).  No license, no car insurance, no big deal; you won’t go to jail.  When you get a ticket, forget about it.  Steal under 900 dollars and you will not go to jail.  If you shoot someone and there is a witness, they will release you until the trial.  It’s not rocket science; if the witness can’t testify, you don’t go to prison.

 What is different for responsible working people?  If you have a job, a family and a home, you cannot behave like that; the government can screw you over. They can foreclose on you house for nonpayment of taxes. If you don’t pay your traffic ticket, the government will go after you. They know you have money.  The threat of jail could mean you lose your job. From there, you can join the homeless.

 Notice, the only ones that have to comply to the laws, are people with money, homes, a family, cars, and a job. If you are homeless and, on the streets, government doesn’t give a damn about you.  You pay no taxes and if they have to lock you up, it costs the city real money. Jail is a service that returns no money back to the government.  It is an expense.

 So, what does it all mean?  If you are here illegally, you get out of jail free. If you are broke, you don’t have to pay things like fines or report to court for physical offences.   But God help you if you are a bonified taxpayer who has money and is a scofflaw. You will pay, because government can ruin your life; they know you have money and they can mess with you.

 The bureaucracy is not stupid, the state government assumes the taxpayers are extremely stupid.  And they are right.  They legalized crime, so don’t act surprised by the results.

 How do you fix this? The poor can live and exist outside of the rules for the middle class without punishment. The poor can ignore the system and there is no repercussion for doing so.  There is no feedback from the state government stating that the deadbeats are not paying their assessed charges. Taxes go up and people move out. Is that the solution to the problem? The answer, sadly is yes.  Most problems solve themselves.  The California State government is broken and cannot be fixed. Don't tell them, there is nothing worse than political indignation. I might not get my 20 ballots for president in the next election.

Tax the Rich

When it comes down to taxing the rich, you have to ask yourself one question, who are the rich?  There are the lottery winners, or those whose fortunes come from novel ideas.  The great majority of rich people overlooked, are those that saved $100 dollars a week for a lifetime.  Its not uncommon for a married couple to amass a fortune of a million dollars.  If the intertest rate was 8% these retirees would be getting $80, 000 a year in interest—not a bad retirement income.  We know that is not the case, it is more like 0.5% interest and that is about $5,000 a year.

 Here is where it gets interesting.  Most of these funds are in IRA’s.  It’s a taxable event if you want to take your money out of it and run.  That is what has created stability in the financial markets.  The average retiree will withdraw funds in a manner that minimizes their taxes each year.

 Let’s take a retired couple with one million in a retirement fund.  Assume 6% inflation.  They will lose $60,000 to inflation the first year. And since they still have the million, they will lose the same 60K the next year if inflation is still at 6%.  So over 10 years, they would lose $600,000 to inflation.  I am assuming that they didn’t dip into the fund for the 10 years to simplify the math.  $1,000,000 minus $600,000 equals $400,000.  That is the buying power of the million-dollar portfolio over 10 years. Their savings have lost 60% of their buying power. So, if you retire at age 70, you will survive the next 10 years okay. Over the following 10 years, your million will turn into $100,000 in actual buying power. Drop a zero off of your wealth every 20 years to determine the forward buying power.

 In the above example it is assumed that you don’t need to withdraw funds from the retirement fund.  Life doesn’t quite work that way. With inflation, your funds will probably last 15 years or less. The US government is not going to raise the interest rate on Treasury’s to 8%, the interest on the national debt would bankrupt the country.  Interest on 30 trillion at 8% is 2.4 trillion.  That’s more than the government collects in taxes.

 The neat thing about taxing the rich, or should I say elderly retired, is that no one is listening to them.  Grandpa and Grandma just didn’t save enough for retirement.  The kids today at age 20 have always paid $7.00 for cigarettes—they were 25¢ when I was 20.  When I was young, I could never understand how my grandfather (who lived to be 98) got so angry over paying 35¢ for a loaf of bread, he would say it was only a nickel when he was a kid.  He saw the theft by government and was frustrated because he could do nothing about it.

 Precious metals appear to be the only lifeline for retirees.   A lot of the trading on the precious metals market, is done on paper and there are no demands for delivery. The real market, is the precious metals shop down the street, take physical possession. Buy gold, silver and platinum for the second 10 years of your retirement.  From my anecdotal sources, no one at the current time is selling metals, everyone is buying.  The weird thing is that a zero will drop off of your total saving in 20 years (buying power), but a zero will be added to the precious metals value.

Old Age Tips

I’m getting old and have learned a few things I would like to pass on to others my age. It doesn’t really pertain to the blog, but what the heck.

The skin on my legs and feet started itching at times and it's really bothersome.  I used to use a prescription ointment to fix it, and it worked well.  I found a better solution.  Rub a teaspoon of water over the leg, getting it wet and rub the skin in a constant motion. You might have to add another one or two teaspoons of water.  After about 30 seconds, you will notice that dead skin is rubbing off.  You’ll find that the itching stops and you don’t need the expensive creams.

Taking a shower washing your hair (if you have any)

I take a shower every day and if you have ever closed your eyes you tend to lose orientation and get dizzy.  In the shower, leave your eyes open and keep your face dry. Water will roll off of your eyelids if you keep them open.  To wash your hair, wet the back half of your head and apply shampoo and pull the shampoo forward to the rest of your hair.  If you do it right, you don’t have to close your eyes.  When you rinse your head, use your hands to shield your eyes from the soap rinse. You can keep your eyes open.